Passenger-vehicle sales in China jumped 11 percent in July 2013, boosted by increased output and larger discounts from dealerships that are clearing their inventory. According to the China Association of Automobile Manufacturers, wholesale deliveries of cars, multipurpose and sports utility vehicles surged to 1.24 million units in July, exceeding the median estimate of 1.22 million units by six analysts polled by Bloomberg News.
Ole Hui, an analyst at Mizuho Financial Group Inc., told Bloomberg that the jump in passenger-vehicle sales in China is due to an “element of push” from carmakers. He remarked that carmakers have increased capacity, which means they have the incentive to push for more volumes and use more discounting."
A number of foreign carmakers like Ford Motor Co., PSA Peugeot Citroen and Volvo Cars opened assembly sites in China this year. Carmakers are increasing their output in a bid to supply the increasing demand in China, wherein sales are expected to top 20 million units this year and 30 million by the end of the decade, according to estimates by the association. An index that tracks vehicle inventory levels in China dropped to 53.2 in July from 56.1 in June – still above the 50-point mark that draws the line for a "reasonable" level of stockpile, according to the China Automobile Dealers Association.
The group remarked that dealers are offering discounts and holding promotions to reduce stockpiles. In the first seven months of the year, dealers sold 12.3 million vehicles in China, placing sales on pace to top the 20 million units forecasted by the association. However, some growth hurdles are showing up in China. For instance, the cities of Tianjin and Wuhan, are mulling to cull vehicle purchase in their territories to cut pollution and ease traffic congestion.